Value Pricing in Your Accounting Firm

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In the last issue, I discussed setting a floor price to give you a starting spot to calculate a return on investment for your client when value pricing. In this issue, we will dive into calculating value. 

Value pricing requires considering how your client perceives the return they will receive using your services. To start understanding your clients' thoughts, you need to ask them questions. The questions you ask during a discovery call must be designed to determine the value your client assigns to your service. 

During a discovery call, I'm listening for how to attach value to: 

My default for value is what happens when profitability is increased by 1 to 3% since increasing profitability is my ultimate goal as a CFO. Then, I apply the profitability increase to business value. For example, if I guide a company doing $1.5 million in revenue to increase profitability by 2% and the industry multiple is around 2.5, that is $75k in valuation creation.

Based on the valuation calculation, my price should be between my floor price ($1.5k/month in the last issue) and $6,250 per month. That is a large gap, so I use Goldilocks (tiered) pricing—creating a good package near my floor price and the best package near the valuation calculation.

I design the best package to address the wants discussed in the discovery call by the prospect. This bespoke offering can be challenging to scale but allows you to maximize margin. I will dive deeper into Goldilocks pricing in the next issue.

The other way to test pricing is experimentation based on capacity. As capacity fills up, you can be more aggressive with pricing. I keep increasing prices until I get too many Nos (3 out of 10 proposals) or capacity expands.

I won a large national client for $10k/month in a CPA firm that took up a significant portion of one of my staff's capacity. The client signed without hesitation, which made me think I had underpriced it. We received another opportunity from the same national client a few months into the engagement. I doubled the price, knowing it would fully book my staff member, and the first owner signed without hesitation. The second owner signed. I was elated. However, they signed without hesitation again, making me think I also underpriced them.

Remember, the value you are selling them is worth more than your time. Peace of mind is precious. Take Rolex, for example. They sell a lifestyle, not a technically perfect watch. Did you know Rolexes are notorious for running fast? But, people still buy them because they sell people on a lifestyle, not a precise timepiece.

I see many accountants get stuck trying to make value pricing perfect. This will not happen. I am far from perfect. Value pricing is an art that takes more practice in communication than in calculation. Getting more than your floor price is a win. See where others have gotten stuck. 👇

Thanks for reading, Luke Templin!

P.S. There are four ways I can help you grow your CAS offerings when you are ready:

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